Local shoppers in 'crisis mode'

By Eli Greenblat

May 15, 2012 — 11.23am

Further proof of the nervous and skittish nature of local consumers has been laid bare with a new survey from The Boston Consulting Group showing Australian shoppers are among the most worried and financially insecure in the developed world, and plan further cutbacks in their discretionary spending.

The leader of BCG’s consumer practice in Australian and New Zealand, James Goth, said local consumers were effectively in ‘‘crisis mode’’.

Shoppers are holding back.Credit:Louise Kennerley

“We might be half a world away from the European financial crisis and the high unemployment levels of the northern hemisphere, but Australian consumers are just as battered and cautious as those in the US, the UK and many other developed countries.”

On the key question of financial security, nearly half - or 47 per cent - of Australian respondents said they felt in financial trouble or not financially secure. This was on par with the US, which has almost double Australia’s unemployment rate, and greater than Europe, France, Germany and the bombed-out economy of Spain.

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Earlier this month the Reserve Bank cut official interest rates by a surprise 50 basis points to help kickstart a recovery in the economy with sagging consumer confidence and a downturn in spending at the shops fuelling a growing unease in the economy.

The Boston Consulting Group’s eleventh annual consumer sentiment survey was conducted in April with 15,000 consumers in 16 countries. The survey included more than 1400 consumers in Australia.

Mr Goth said the concerns of local consumers were much higher than a year ago, when Australia was included in BCG’s global survey for the first time.

Concerns about personal finances rose sharply, he said.

Almost half (47 per cent) of Australian consumers feel they are in financial trouble or not financially secure, up from 36 per cent a year ago. This is equal with the US, higher than in the UK (45 per cent) and higher than all other developed countries surveyed except Italy and Japan.

Job security has also become a much greater concern. Among local consumers, 22 per cent feel very insecure or somewhat insecure in their current job in the next year, up from 17 per cent a year earlier. This matches the level of job insecurity in France, and is only marginally behind the US (23 per cent).

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The survey found that the percentage of all consumers saying they will spend less on discretionary items in the next year increased from 47 per cent in 2011 to 50 per cent in 2012.

This is higher than in the US (46 per cent), the UK (47 per cent) and level with the average of the major European economies surveyed.